No ruckus about cuts in Medicare

Hospitals, doctors and other Medicare providers are on the hook for a 2 percent cut under looming government spending reductions. But they’re not raising a ruckus. Why?

The pain could be a lot worse if President Barack Obama and congressional Republicans actually did reach a sweeping agreement to reduce federal deficits.

Automatic cuts taking effect Friday — the “sequester” in Washington-speak — would reduce Medicare spending by about $100 billion over a decade. But Obama had put on the table $400 billion in health care cuts, mainly from Medicare. And Republicans wanted more.

“What people were really worried about was the prospect of a huge deficit bill that could target Medicare for $400 billion or $500 billion,” said John Rother, president of the National Coalition on Health Care, an umbrella group that includes service providers.

“The health care industry fears the alternative more than they fear a predictable reduction in rates,” said Dan Mendelson, president of Avalere Health, a market analysis firm. “They just do not want to roll the dice. That is why you do not hear as much of an outcry on Medicare.”

The budget machinations come at a time when the threat that the government will be overwhelmed by surging health costs seems less immediate. Taking care of aging baby boomers is still a huge challenge, but health care inflation has slowed dramatically in the last few years, leading government number crunchers to scale back their estimates of future costs.

The nonpartisan Congressional Budget Office has reduced its 10-year projections of Medicare spending by $137 billion, a liability wiped off the ledger without the need to cut reimbursements to hospitals and doctors, or to raise premiums for Medicare’s 50 million beneficiaries.

The health care portion of the automatic spending cuts was designed to try to avoid pain for individuals and families. Medicaid, the health care program for the poor, was exempted, as were the biggest subsidies under Obama’s health care law.